In a summer marked by landmark family law rulings, financial planners and lawyers face significant implications for how pre-marriage wealth, inheritance, and asset transfers are treated in divorce. Chris Fairhurst, Partner in the Brabners Personal Family team, explores what the recent Helliwell v Entwistle and Standish v Standish judgments mean for advisers and their clients.
In the Summer of Legal Shakeups, what do financial planners, lawyers and clients need to know?
From Helliwell v Entwistle to the Standish v Standish case, heard by the UK Supreme Court, this has truly been a summer of landmark family law legal decisions. The landscape has been shifting for a number of years, emphasising the need for financial honesty between divorcing couples and these two cases in particular highlight the critical role of intention relating to assets held pre-marriage and effective financial disclosure in respect of pre- and post-nuptial agreements.
With couples already navigating a heightened tax environment and the upcoming Budget looming in October, it’s crucial that financial planners and lawyers understand the outcome of these cases and what it means for clients and their assets, especially if advising about transfer of assets between generations, or those held by one before the marriage, to the sole or joint ownership of the other spouse.
Digging into the detail of the Standish judgment
The Standish judgment brings much-needed clarity on the treatment of non-matrimonial property in financial remedy proceedings following divorce. At the heart of the decision is the concept of ‘matrimonialisation’, which describes how assets acquired by one spouse—whether by prior ownership, inheritance, or increasingly as a result of a generational transfer—may become matrimonial property due to intention or use.
The Supreme Court unanimously dismissed the wife’s appeal, confirming the Court of Appeal’s decision about the limits upon sharing non-matrimonial assets provided that an individual’s needs could be met from matrimonial assets.
The wife had argued that the “2017 Assets,” transferred to her by the husband as a result of tax advice received by him, intending them to be put into Trust for the benefit of his adult children, had been gifted to her outright and should be shared equally. The Court found that they were never intended to be held jointly and therefore, only 25% of the £132 million assets were matrimonial property. The remaining 75%, held primarily by the husband before the marriage, remained non-matrimonial.
As such, non-matrimonial pre-marital and inherited/gifted assets should only be considered for division if the matrimonial assets are insufficient to meet future capital, income, or pension needs.
Lessons from Helliwell v Entwistle
While the Helliwell v Entwistle case didn’t make it to the UK Supreme Court, its impact remains significant. The case originally caught the media’s attention a few months ago about the couple who had signed a “drop hands pre-nup”, intending to keep what they each brought to the marriage in the event they divorced.
On divorce the husband sought far more than he was offered from his ex-wife’s £61 million fortune, arguing that his needs were such that he couldn’t rely on his own assets alone. While the Judge originally ruled in the wife’s favour and famously told the husband to learn “how to make an omelette”, the recent Court of Appeal judgement overturned this.
In what is fair to say, a home run for the husband – the court found that the wife’s argument that the husband be held to the agreement, notwithstanding her insufficient financial disclosure, should not be upheld, and the husband’s needs would be reassessed.
In a nutshell, the Court of Appeal has said if you ‘lie’ about what you own, prepare to be penalised in two ways. One: expect any order or agreement to be set aside and reconsidered. Two: prepare to pay the wasted legal costs incurred as a result.
The shifting landscape of matrimonial law
In the case of Standish, the value of recommending an individual enter into a pre- or post-nuptial agreement to protect non-matrimonial assets is reinforced. These agreements can offer clarity and certainty over how assets—particularly those acquired before marriage, through inheritance, or as part of tax planning—will be treated in the event of divorce.
And while pre-nups are not absolutely binding in the UK, and always subject to a final order of the court to determine whether they are fair, they are increasingly likely to be given due weight by the court if both parties had entered into one with full and frank financial disclosure and independent legal advice before doing so.
Why financial planners must be part of the conversation
Given many high and ultra-high net worth individuals are considering pursuing lifetime gifting strategies—including transfers of property, capital, and shares in family businesses to reduce potential inheritance tax exposure—enlisting the support of financial planners and lawyers is critical. Coordinated advice ensures that any agreement achieves what is intended and avoids unintended consequences of such transfers, such as changes in controlling shareholdings.
As Standish shows, without joined-up legal and financial planning, a gift intended for tax efficiency may inadvertently become a source of legal dispute later.
Protecting clients from matrimonialisation
This judgment should also serve as a notice to those receiving substantial transfers during or in anticipation of a marriage: ensure the intention behind any transfer is properly recorded. That distinction can determine whether it is excluded from matrimonial property in the event of divorce.
Standish highlights that effective ringfencing of pre-marriage assets ensures they will not fall to sharing on divorce, provided they have not been matrimonialised (whether by intention or by use of the parties), or are not required to meet “needs”.
Clients must make sure that pre-existing wealth is fully identified as separate, non-shared wealth. For any pre- or post-nuptial agreement, honesty and clarity are critical about what is being shared and why. In practical terms, to avoid matrimonialisation and potential sharing in the event of divorce, advisers should plan to avoid mingling assets so that ownership is uncertain or subject to joint use.
No guarantees, but greater certainty
An agreement cannot prevent an application to court should one party insist on doing so, and there are numerous examples of couples spending considerable sums pursuing arguments even after entering into an agreement. But what it can do is narrow the issues a court may need to determine and set out proposals intended to bind the parties in the future.
And if one party tries to go behind such an agreement and fails, then they may well face paying the other’s legal costs.
Preparing for all outcomes
While no couple ties the knot with divorce in mind, being prepared for all situations is key. This means enlisting the support of experienced legal professionals and financial planners who understand the shifting landscape of matrimonial law.
For high-net-worth individuals especially, the stakes have never been higher. Couples shouldn’t be taking bets on their future—transparency, proper pre-emptive legal advice, and comprehensive financial disclosure aren’t optional extras. They’re fundamental requirements for protecting wealth across generations.
In the Summer of Legal Shakeups, what do financial planners, lawyers and clients need to know?
Chris Fairhurst, Partner in the Brabners Personal Family team.
From Helliwell v Entwistle to the Standish v Standish case, heard by the UK Supreme Court, this has truly been a summer of landmark Family law legal decisions.
The landscape has been shifting for a number of years emphasising the need for financial honesty between divorcing couples and these two cases in particular highlight the critical role of intention relating to assets held pre-marriage and effective financial disclosure in respect of pre- and post- nuptial agreements
With couples already navigating a heightened tax environment and the upcoming Budget looming in October, it’s crucial that financial planners and lawyers understand the outcome of these cases and what it means for clients and their assets, especially if advising about transfer of assets between generations, or those held by one before the marriage, to the sole or joint ownership of the other spouse.
Digging into the detail
The Standish judgment brings much-needed clarity on the treatment of non-matrimonial property in financial remedy proceedings following divorce.
At the heart of the decision is the concept of ‘matrimonialisation’ which describes how assets acquired by one spouse, whether by prior ownership, inheritance, or increasingly as a result of a generational transfer, may become matrimonial property due to intention or use.
The Supreme Court unanimously dismissed the wife’s appeal, confirming the Court of Appeal’s decision about the limits upon sharing non-matrimonial assets provided that an individual’s needs could be from matrimonial assets.
The wife had argued that the “2017 Assets,” transferred to her by the husband as a result of tax advice received by him, intending them to be put into Trust for the benefit of his adult children, had been gifted to her outright and should be shared equally. The Court found that they were never intended to be held jointly and therefore, only 25% of the £132 million assets were matrimonial property. 75% held primarily by the husband before the marriage, remained non-matrimonial.
As such, non-matrimonial pre-marital and inherited/gifted assets, should only be considered for division if the matrimonial assets are insufficient to meet future capital, income or pension needs.
While the Helliwell v Entwistle case didn’t make it to the UK Supreme Court, its impact remains significant. The case originally caught the media attention a few months ago about the couple who had signed a “drop hands pre-nup”, intending to keep what they each brought to the marriage, in the event they divorced. On divorce the husband sought far more than he was offered from his ex-wife’s £61million fortune, arguing that his needs were such that he couldn’t rely on his own assets alone.
While the Judge originally ruled in wife’s favour and famously told the husband to learn “how to make an omelette”, the recent Court of Appeal judgement overturned this.
In what is fair to say, a home run for the husband – the court found that the wife’s argument that the husband be held to the agreement, notwithstanding her insufficient financial disclosure, should not be upheld, and the husband’s needs would be reassessed.
In a nutshell, the CoA have said if you ‘lie’ about what you own, prepare to be penalised in two ways. One, expect any order/agreement to be set aside and reconsidered and second, to have no complaints when being ordered to pay the wasted legal costs incurred as a result.
The shifting landscape of matrimonial law
In the case of Standish, the value of recommending an individual enter into a pre- or post-nuptial agreements to protect non-matrimonial assets is reinforced. These agreements can offer clarity and certainty over how assets, particularly those acquired before marriage, through inheritance, or as part of tax planning, will be treated in the event of divorce.
And while pre-nups are not absolutely binding in the UK, and always subject to a final order of the court to determine whether they are fair, they are increasingly likely to be given due weight by the court if both parties had entered into one with full and frank financial disclosure and independent legal advice before doing so.
Given many high and ultra-high net worth individuals are considering pursuing lifetime gifting strategies, including transfers of property, capital and shares in family businesses to reduce potential inheritance tax exposure, enlisting the support of financial planners and lawyers is critical to ensure that any agreement achieves what is intended and unintended consequences of such transfers, such as changes in controlling shareholdings, might be avoided. As Standish shows, without coordinated legal and financial advice, a gift intended for tax efficiency may inadvertently become a source of legal dispute later.
This judgment should also serve as a notice to those receiving substantial transfers during or in anticipation of a marriage, to ensure the intention behind any transfer is properly recorded, to distinguish anything received from matrimonial property in the event of a divorce in the future.
Standish highlights that effective ringfencing of pre-marriage assets ensures they will not fall to sharing on divorce, providing that they have not been matrimonialised (whether by intention or use of the parties), or are not required to meet “needs”, which there can be an effective protection of pre-existing or acquired wealth.
Clients must make sure that pre-existing wealth is fully identified as separate, non-shared wealth, and that in respect of any intention to prepare a Pre-nuptial, or indeed Post-nuptial Agreement, honesty and clarity is critical about what is being shared and why. In practical terms, to avoid matrimonialisation and potential sharing in the event of divorce, advisors will need to plan to avoid mingling of assets so that ownership is uncertain, or become subject to use by a couple, where it might be argued an asset has been utilised for the benefit of the marriage.
An agreement cannot prevent an application to court, should one party insist on doing so, and there are numerous examples of couples spending considerable sums in pursuing arguments even after entering into an agreement with each other, but what it can do is attempt to narrow the issues that a court may have to determine and set out a list of proposals intended to bind the parties in the future. And if one party tries to go behind any agreement reached in such circumstances and fails, then they may well have to face paying the other’s legal costs.
While no couple ties the knot with divorce in mind, being prepared for all situations is key. This means enlisting the support of experienced legal professionals and financial planners who understand the shifting landscape of matrimonial law.
For high-net-worth individuals especially, the stakes have never been higher. Couples shouldn’t be taking bets on their future, transparency, proper pre-emptive legal advice, and comprehensive financial disclosure aren’t optional extras—they’re fundamental requirements for any couple serious about protecting their financial interests.
